Gone are the days when you had to invest in properties within your local area. With the rise of tools like advanced communication technologies, 3D imaging, virtual tours/reality, and online marketplaces for turnkey investment properties, long-distance real estate investing is becoming increasingly common.
Of course, there are some extra challenges involved in choosing, buying, maintaining, improving, renting out, and selling homes sight unseen and from afar. But you can certainly overcome these obstacles, opening up a global marketplace for your real estate investments.
This may be particularly appealing if you live in an area with a highly competitive real estate market or prohibitively expensive properties. Or, on the other hand, if you live somewhere with a sluggish market, little potential for rental income, or other investment shortcomings.
Below is advice for successfully getting involved in long-distance real estate investing.
Choosing a Location
With the ability to invest in real estate just about anywhere, how do you hone in on a good place? To greatly increase your chances of success, invest in areas that:
- Have a growing population (never invest from afar in a place with a declining population)
- Have a population that skews young (promising for future growth and development)
- Have stable and diverse employment opportunities (a town that depends largely on a single employer or a few employers in one industry is at higher risk of economic collapse)
- Have low vacancy rates
- Have good schools
- Have low crime rates
Long-Distance Real Estate Investing Tips
Here are some more pointers on investing in real estate from a distance:
- Research the area thoroughly, including market conditions and average rental rates
- Use a real estate agent or a property management company to represent your interests and handle things locally
- Alternatively, consider a local investment partner if you can find one you truly trust (it would be easy for them to take advantage of you)
- Keep in mind that short-term partnerships tend to work better, as long-term partnerships have more opportunity for disagreements, for one party to have financial problems, etc.
- Work with a tax and investment professional based locally who is well acquainted with local regulations, tax codes, and other important legal aspects
- Consult with this professional before making decisions about holding your property as an individual investor or a legal entity
- Perform thorough research on any contractors you’re considering (this is one area where a local real estate agent or professional property manager can be very helpful)
- Find a local eviction service before you need it
- Invest in landlord software or an app that automates much of the work (there are products out there today that automatically distribute home listings to key websites, collect tenant applications, collect and directly deposit rent payments, create lease agreements, generate reports, etc.)
- Keep up with preventive maintenance and requested repairs diligently to avoid more costly repairs and other complications that are especially tricky to address from afar